Securities Mergers & Acquisitions Civil Procedure

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No Auction Required – Delaware Supreme Court Affirms Board Flexibility under Revlon

Ruling that an active solicitation process is not necessarily required for a target board of directors to satisfy its fiduciary duties in a change of control transaction, the Delaware Supreme Court overturned a preliminary...more

In re Novell, Inc. S’holder Litig., C.A. No. 6032 (Del. Ch. Nov. 25, 2014) (Noble, V.C.)

In this memorandum opinion, the Court of Chancery granted summary judgment in favor of defendants on claims alleging that directors acted in bad faith by favoring a bidder in a sale process for reasons other than the pursuit...more

Court Clarifies Law on Enforceability of Obligations of Non-Signatories in Private Mergers

In a fact-specific case with potential ramifications for future mergers under Delaware law, Cigna Health and Life Insurance Co., a preferred stockholder of Audax Health Solutions Inc., whose shares were extinguished by a...more

Cigna Health and Life Ins. Co. v. Audax Health Sol’ns, Inc., C.A. No. 9405-VCP (Del. Ch. Nov. 26, 2014)

In this action seeking a declaratory judgment regarding the validity of certain provisions in a merger agreement and related contracts, the Court of Chancery granted in part plaintiff’s motion for judgment on the pleadings,...more

Expedited Proceedings Denied Where Harm Is Only Speculative

The Delaware Chancery Court recently denied a shareholder’s motion to expedite proceedings to enjoin a company buyout, finding that the shareholder failed to show that any threatened harm from the buyout was imminent,...more

Applying Delaware’s Direct vs. Derivative Analysis to Contract Claims

In NAF Holdings, LLC v. Li & Fung (Trading) Limited, 2014 WL 6462825 (2d Cir. Nov. 19, 2014), the Second Circuit considered, but did not decide, whether the usual direct/derivative analysis governing minority stockholder...more

Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, C.A. No. 7906 (Del. Ch. Nov. 26, 2014) (Glasscock, V.C.)

In this memorandum opinion, the Court of Chancery largely denied but granted in part defendants’ motion to dismiss claims relating to a 2011 merger in which plaintiffs Great Hill Equity Partners IV, LP and related entities...more

Delaware Court Invalidates Release and Indemnification Obligations Against a Selling Stockholder in a Merger Transaction

The Delaware Chancery Court recently invalidated a buyer’s attempt to obtain a release and indemnification obligations from selling stockholders of a Delaware corporation that was acquired in a merger. The ruling will require...more

Minority Shareholders' Alleged Control of Management and Operations Does Not Establish Domination of the Board

Emphasizing the demanding pleading standards a shareholder must meet to show that a minority shareholder controls a board of directors, on November 25, Vice Chancellor Glasscock dismissed claims for breach of fiduciary duties...more

New York Appellate Court Affirms Business Judgment Rule for Going-Private Transaction

New York companies seeking to go private with a controlling shareholder may now be less vulnerable to shareholder litigation. On November 20, 2014, the New York Appellate Division, First Department, affirmed a New...more

SEC Files Settled Insider Trading Case In District Court

After bringing a series of insider trading cases as administrative proceedings in recent weeks, the Commission returned to its more traditional approach. The agency filed settled insider trading charges against a CEO and...more

Business-Judgment Rule Applied in New York to Going-Private Transaction with Procedural Protections

The New York Appellate Division, First Department, ruled Thursday that the business-judgment rule – not the entire-fairness standard of review – can apply to a going-private transaction with the majority shareholder where the...more

Delaware Court of Chancery Applies Business Judgment Rule to Directors Who Approve Merger Supported by Large Shareholders

In its October 24, 2014, decision in In re Crimson Exploration Inc. Stockholder Litigation, C.A. No. 8541, the Delaware Court of Chancery confirmed that the business judgment rule is applicable in evaluating claims for breach...more

Tax Court Characterizes Technology Executive’s Merger Proceeds as Ordinary Income

On October 30th, the U.S. Tax Court ruled that a key executive of a technology company acquired by Google for $93 million was required to report a large portion of his merger consideration as ordinary compensation income....more

Delaware Chancery Requires Payment of Merger Consideration to Dissenting Stockholder After Expiration of Appraisal Period

The Delaware Court of Chancery recently dismissed corporate mismanagement and breach of fiduciary duty claims filed by a dissenting stockholder, but ordered that the surviving corporation in a merger was required to pay the...more

In re TPC Group Inc. S'holders Litig., C.A. No. 7865-VCN (Del. Ch. Oct. 29, 2014) (Noble, V.C.)

In this letter opinion, the Court of Chancery denied plaintiffs’ application for an award of attorneys’ fees and held that plaintiffs’ class action litigation was not the cause of the increase in the merger price achieved...more

Going Private Mergers: More Lenient Standard of Judicial Review Now Available

A recent Delaware Supreme Court decision has changed the rules for post-transaction litigation review for “going-private transactions.” The court described the conditions necessary for such a transaction to be judged by the...more

Delaware Court of Chancery Rejects Entire Fairness Review in Absence of Conflicted Transaction

On October 24, the Delaware Court of Chancery dismissed a lawsuit filed by certain minority stockholders of Crimson Exploration, Inc. in In re: Crimson Exploration Inc. Stockholder Litigation, C.A. No. 8541-VCP (Del. Ch. Oct...more

Delaware Court Establishes "Taxonomy" For Controlling Stockholder Claims

In a recent decision, the Delaware Court of Chancery (Parsons, V.C.) dismissed a shareholder class action complaint alleging that a target company’s board of directors and private equity firm controlling stockholder breached...more

M&A Update: Federal Court Decision in Allergan Control Battle Raises Serious Questions for New Takeover Technique

The Federal District Court’s November 4th ruling in Allergan, Inc. vs. Valeant Pharmaceuticals International, Inc. raises “serious questions” for the takeover partnership employed by Valeant and Pershing Square in their...more

2014 Autumn Review – M&A Legal Developments

We set out below a number of interesting English and European court decisions which have taken place and their impact on M&A transactions. This Insight looks at these developments and gives practical guidance on their...more

In re KKR Financial Holdings LLC S'holder Litig., Consol. C.A. No. 9210-CB (Del. Ch. Oct. 14, 2014) (Bouchard, C.)

In this opinion, the Court of Chancery dismissed a purported class action by stockholders of KKR Financial Holdings LLC (“KFN”) challenging its acquisition by KKR & Co. L.P. (“KKR”) in a stock-for-stock merger, rejecting...more

Delaware Court Dismisses Action Against Seller's Directors and Financial Advisor, And Finds That Large Stockholder's "Side Deals"...

On October 24, 2014, the Delaware Court of Chancery issued a decision, In Re: Crimson Exploration Inc. Stockholder Litigation, addressing when: (i) a stockholder with less than majority voting power may be deemed a...more

Delaware Court of Chancery Rejects Controlling Stockholder Claims and Applies Business Judgment Rule to Merger Suits

In In re KKR Financial Holdings LLC Shareholder Litigation, C.A. No. 9210 (Del. Ch. Oct. 14, 2014), the Delaware Court of Chancery dismissed a shareholder derivative suit brought by shareholders of KKR Financial Holdings LLC...more

Delaware Court of Chancery Rejects Contemporaneous Ownership Requirement For Creditors Asserting Derivative Claims

In Quadrant Structured Products Co. v. Vertin, C.A. No. 6990-VCL, 2014 Del. Ch. LEXIS 193 (Del. Ch. Oct. 1, 2014), the Delaware Court of Chancery held that when creditors of insolvent firms assert derivative claims, they need...more

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